The other side of "freedom"

Observations on Hungary

There are two pictures of life today in the former socialist countries of eastern Europe. The first, the standard western line peddled by Timothy Garton Ash and other zealots of European integration, is of increasingly prosperous people rejoicing in new-found political freedoms and in their countries' status as members of the EU and Nato.

Then there is the reality. Hungary is by no means the worst off, but its problems are common to every other ex-socialist nation that has surrendered the management of its economy to the dictates of foreign capital and the EU. Fifteen years of neoliberalism have caused an economic contraction that, in the words of the Budapest economist Laszlo Andor, "can only be compared to the Great Depression in the 1930s". Hungary's GDP fell 20 per cent in the years after the political transformation: it was only in 2002 that output returned to its 1989 level. A corollary of "reform" has been the ever-widening gap between rich and poor.

At number 70 in the list of the 100 richest Hungarians is the country's new prime minister and leader of the Socialist Party, Ferenc Gyurcsany. Like many others, he made his fortune (£10m at the latest count) from the privatisation of state property in the early 1990s. For the overwhelming majority, real incomes continue to fall. And they will fall further as the government embarks on more deflation to meet its target of joining the euro in 2010.

Though there was a 65 per cent No vote in a national referendum on the subject, the government refuses to drop plans to privatise healthcare. Public transport is also under threat. BKV - Budapest Transport Limited - has recently subcontracted two of its routes: the first stage in privatising one of the best mass transport systems in the world. In the past year, Hungary's privatisation receipts have reached record levels.

Yet, for foreign capital and its emissaries, this is still not enough. The Budapest Business Journal's Matthew Higginson accused the government of "avoiding the reforms needed to tackle the problem head on". The same paper, in an editorial, called a national campaign against health privatisation a "wasteful, divisive circus".

What the Hungarian people think about this or anything else does not matter. When the parliament voted in November for the return of the country's 300-strong logistic force from Iraq - a move supported by most of the public - the prime minister announced that he would instead send 150 soldiers to Iraq under a Nato umbrella: under Hungarian law, deployments under Nato do not require parliamentary approval.

At the same time as the government says there is no alternative to "economic reorganisation" of the health service, the Hungarian defence ministry announces that it will spend 2.7 billion forints (£7.7m) on new medium-range air-to-air missiles from the US arms manufacturer Raytheon. This comes on top of 12 billion forints (£34.5m) for "training reforms" to "adapt" the armed forces to the demands of Nato and EU membership.

For those whose financial fortunes are linked to privatisation and Euro-Atlantic integration, 2005 promises to be even more lucrative than 2004 was. But everyone else in Hungary had better make sure they don't get ill - or forget to turn the central heating down.